- Investors compared Merck’s willingness to pay a 42% premium for mid-stage leukemia drug TERN-701 with Sellas’ AML pipeline opportunity.
- Several retail investors pointed to Pfizer as a potential buyer, citing its ongoing expansion in hematologic cancers and need for post-COVID growth drivers.
- Attention is focused on the Phase 3 Regal trial of GPS in AML relapse patients, which had recorded 72 of 80 required death events for final analysis as of late December.
Shares of Sellas Life Sciences (SLS) jumped over 6% on Wednesday as Merck’s $6.7 billion acquisition of Terns Pharmaceuticals triggered renewed buzz on potential takeover targets across blood-cancer drug pipelines.
SLS stock has risen 41% this quarter and has surged over 300% over the past year.
Merck’s Terns Deal Spurs Leukemia Interest
Merck said it would acquire Terns for $53 per share in cash, representing a 42% premium to the 90-day average before the deal’s announcement.
The acquisition adds TERN-701, an oral leukemia drug currently in early-to-mid-stage clinical testing, to Merck’s blood-cancer pipeline. The treatment is being studied for patients with chronic myeloid leukemia whose disease did not respond well to earlier therapies or who could not tolerate them.
Now, retail investors are drawing comparisons between Merck’s willingness to pay billions for a mid-stage leukemia asset and the perceived commercial opportunity around Sellas’ pipeline.
Retail Traders Bet On Pfizer As Potential Buyer
On Stocktwits, retail sentiment for SLS has remained in the ‘bearish’ zone over the past week amid an over 350% surge in message volume this quarter. The stock’s watcher base has jumped 20% over the past year.
Sentiment over the past day has increasingly centered on Pfizer as a potential acquirer following the Merck-Terns deal. One trader said, “My $$ is on PFE to acquire SLS.”
The investor pointed to Pfizer’s ongoing clinical work on Mylotarg in CD33-positive acute myeloid leukemia (AML), noting that the company is conducting a prospective surveillance study to evaluate the drug’s safety and effectiveness in newly diagnosed patients as part of its push into hematologic cancers.
Another trader argued Pfizer may be seeking a major oncology win following the pandemic-era revenue decline, saying, “They need a clear win to bury the COVID era and leave it behind… What is better than a cancer moonshot?”
Another investor highlighted motivations behind possible acquisitions, saying “PFE stock and shareholders [are] looking desperately for a powerful boost.”
Retail Traders Run Buyout Valuation Scenarios
One retail investor estimated that applying a typical 5x-8x peak-sales multiple to projected revenue of about $5.5 billion for Sellas’ lead AML candidate, Galinpepimut-S (GPS), and $1.2 billion for its CDK9 inhibitor, SLS-009, could imply a valuation range of roughly $33.5 billion to $53.6 billion.
Another trader compared the Merck-Terns transaction directly with Sellas’ opportunity: “If TERN was acquired by MRK for 8.8b. and our product has market size smaller than TERN. our upside should be 4x-6x?”
A separate user discussed potential acquisition structure scenarios, saying, “Wouldn’t a PFE stock purchase be sweet. All long term holding period and a 6.30 dividend. Four to one share SLS.”
Another trader suggested the setup for a deal may already be in place: “The table is now fully set for interested pharma’s to finish a deal!” One investor also outlined a portfolio strategy for a possible acquisition, saying, “If PFE offers id sell my options. Keep 33% as pfizer shares if share based and sell the rest.”
GPS Catalyst Aligns With Pfizer Moves
Investor attention remains focused on Sellas’ Phase 3 Regal trial evaluating GPS in AML patients whose cancer returned and then went back into remission after additional treatment. The study is designed to reach its final analysis after 80 patient death events, with 72 recorded as of Dec. 26 while the trial remained fully blinded, placing the program closer to a potential results-driven catalyst.
Merck’s move to buy TERN-701 underscores continued demand for blood-cancer assets, while Pfizer has been stepping up investment in oncology as it looks to rebuild growth after the sharp decline in COVID vaccine revenues and increasing competition across several aging products.
The company has expanded its cancer pipeline through initiatives including its $1.25 billion upfront licensing deal with 3SBio, ongoing development of Mylotarg in AML and progress with Tukysa in breast cancer.
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